'Ride-sharing' services gaining traction in Nashville

Officials attempt to decide whether, how to regulate them

Dec. 23, 2013

Written by

G. Chambers Williams III

The Tennessean

AT A GLANCE

UBER

» Founded: 2009 in San Francisco » Cost: UberX has a base fare of $2.50, with rates of 25 cents per minute when traveling less than 11 miles per hour or $1.60 per mile at faster speeds. » Number of cities: More than 65

LYFT

» Founded: 2012 in San Francisco » Cost: Lyft offers you a recommended travel fare (determined by the time and distance traveled), which is estimated to be 20 to 30 percent less than a traditional cab ride. » Number of cities: 19

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The new “ride-sharing” services in Nashville — Lyft and Uber — do not regard themselves as taxi operators, but the city’s cab companies disagree, as do a growing number of state and municipal transportation regulators nationwide.

Using smartphone apps, both services connect riders with private, personally owned cars and drivers, and even collect fares — and tips — by credit card through the apps.

But the cars that pick up the paying customers aren’t licensed taxis, and their drivers aren’t licensed taxi drivers, either, except in the case of some drivers who might leave the cab companies to join the cadre of vehicle owners now offering rides through Lyft and Uber.

“All of the Nashville cab companies are upset,” said Melinda Grant, manager of Green Cabs, who has been working to get the licensed taxi operators organized to fight Lyft and Uber. “They came in here under the radar, through some back door, and set up taxi businesses that are in direct competition with our licensed cab companies.

“So far, they’re being allowed to operate without restriction,” she said. “They apparently do not have to be licensed by the city’s Transportation Licensing Commission like we do; in fact, they’re not regulated at all. Their cars are not inspected; we don’t even know if they have insurance.”

Both Lyft and Uber contend they conduct criminal background and driver safety checks on all drivers.

In terms of insurance, both companies say drivers must have at least the minimum insurance required by law; in addition, Lyft provides drivers with $1 million in liability coverage above and beyond any personal coverage.

The story has been similar nationwide in the dozens of cities where the services have already set up shop.

The services are bankrolled by millions from Silicon Valley companies and tech investors such as Google, who insist that these are technology companies merely connecting empty cars and idle drivers with people who need rides, said Alfred LaGasse, CEO of the national Taxicab, Limousine and Paratransit Association in Rockville, Md.

“We would argue that they do have to be licensed, as they are a for-hire vehicle service,” LaGasse said.

“If people call, they deliver a vehicle and the people pay for the service — it’s a taxi. But there are some things that make them different. There are no FBI criminal background checks of their drivers, … no requirement to have their vehicles inspected, no requirement that they carry commercial liability insurance.”

Without any of those requirements, LaGasse said, “it’s frustrating for us. Most communities regulate the taxi industry for the public’s benefit, but some are allowing these newer players to operate by a different set of rules.”

The two companies, along with a third one that isn’t yet in Nashville — SideCar — are already in at least 26 U.S. cities, and about 60 cities worldwide, and are being allowed to operate mostly without any interference from regulators, LaGasse said.

Local regulators 'gathering data'

So far, they’ve had no resistance from Nashville’s taxi and limousine regulators, either. Lyft has been operating about three weeks, Uber about two weeks (Uber has two versions — a black car version and a lower-cost option for everyday riders called UberX.)

“The city’s position for now is that we’re gathering the data about these services, and we want to understand it before we make any kinds of rulings,” said Billy Fields, director of the Metro Transportation Licensing Commission, which regulates taxi and limousine services in Nashville.

“We want to make sure we’re dealing in a fair and balanced way.”

Are they cab companies that need to be regulated by the city?

“Frankly, we don’t know yet,” Fields said. “Because it’s different, it doesn’t fit anything we already have. We’re trying to completely understand their operational model before we take any further steps. When these (transportation) ordinances were written, nothing like this was anticipated.”

Fields said he knows the companies are operating in other cities, and “we’re trying to talk to some of those cities to get more information. But these companies do not own or control any cars. They are a software app on a smartphone. And we want to be a city where innovation is appreciated. But we also want to make sure the public is safe. That’s why we exist.”

The Nashville Area Chamber of Commerce has taken no position on whether the new services should be regulated but is concerned about a shortage of transportation options in the city, chamber President Ralph Schulz said.

The city has about 800 cabs but needs more, tourism officials have said.

“We just wrote a letter to the taxi commission saying we’re in favor of expanding tourist access to transportation, especially as the convention center begins to hit high gear,” Schulz said.

“There is not a sufficient number of taxis right now. While we never take a position on a private company or approach, we do look at problems, and we’re concerned about the availability of transit.”

California model

California, where the services began, already has issued a set of regulations that allow these companies to operate under a new category of business, called “Transportation Network Companies.”

Regulated by the California Public Utilities Commission, which also governs limousine and bus services, a Transportation Network Company is defined by the agency as “an organization, whether a corporation, partnership, sole proprietor, or other form … that provides prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles.”

The commission’s rules supersede municipal taxi regulations and require that each operator — but not the individual drivers — obtain a state license, provide commercial liability insurance of at least $1 million per accident, conduct criminal background checks on the drivers, put cars through a 19-point safety inspection, establish a driver-training program and “implement a zero-tolerance policy on drugs and alcohol.”

Conceding that the new ride-sharing services are innovative — something California prides itself on — the commission’s ruling also says:

“The commission is aware that (Transportation Network Companies) are a nascent industry. Innovation does not, however, alter the commission’s obligation to protect public safety, especially where, as here, the core service being provided — passenger transportation on public roadways — has safety impacts for third parties and property. The commission is familiar with and confident in its ability to protect public safety in the face of rapid technological change.”

Uber spokeswoman Nairi Hourdajian said the company decided to follow Lyft’s lead and offer its Uber ride-sharing service in Nashville after seeing no apparent opposition from local regulators.

“A ride-sharing service (Lyft) started in Nashville, and the city seemed to give its passive approval,” she said.

“That opened the door for us. We haven’t heard any reports of the city cracking down on Lyft. Wherever we go, we look to the cities for cues on what kinds of services they want, and in Nashville, it looks like they are open to ride sharing. To us, it’s all about consumer choice. But we only launch services according to what the local regulations allow or when the local authorities express an interest.”

Taxi driver lured by income guarantee

While the Nashville cab companies are taking exception to the new services, at least one taxi driver has already quit and gone to work driving for Uber, lured by the company’s Facebook posts and Craigslist ads promising $20 an hour.

Sheila Clifford said she gave up her Checker cab last week and now is driving her own 2008 Pontiac Grand Prix full time for Uber — and getting, at least for now, a guaranteed $15 an hour when she’s on duty.

“I’m doing pretty well, so far,” Clifford said. “Most days I’ve been slammed. People love it, and some of my passengers have said they will never take a cab again. They love the pure convenience of it. They just push a button on their app and see where the nearest available car is, and it’s there in minutes. No cash changes hands.”

For now, Uber is paying her to carry its customers, who are riding free through the end of the month as part of the company’s introduction of the service to Nashville, Hourdajian said.

After that, the drivers will get 80 percent of the fares collected by Uber, and the company will keep the rest.

Clifford believes the city needs the new services, especially with the Music City Center now open.

“This city has millions of visitors coming in every year, and there just aren’t enough cabs,” she said. “Having something like this is a necessity. I’m thrilled that we’re progressing like the bigger cities and allowing services like these.”